Gaia Interactive, a San Jose, Calif. creator of virtual world software, has laid off 13 percent of its employees (16 full-time and 20 contractors) due to unfavorable market conditions. The cuts follow an $11 million third round of funding the company announced in July.
It's rumored that Gaia's revenue for November came in much lower than anticipated, considering its summer launch of zOMG! (its new anime-flavored world for tweens). As of last week, the platform had 500,000 active users, a disappointing fraction of Gaia's 7 million userbase. The company says the cuts were made as part of a forward-looking strategy focused on conserving cash in between slowing investment rounds.
The July round was led by Institutional Venture Partners, and was tacked on to a prior strategic investment of $20.9 million from Sony, Time Warner, DAG Ventures, Benchmark Capital and Redpoint Ventures.